How to Save Money for College
If you are like most parents of teens you are trying to figure out how you will save money for college. While there are a number of college savings plans out there, it is important you find the one that is best for you and your child.
There are a few things you need to take into consideration.
The first thing is what your teen will be choosing as a career path. While this may change as the child gets older, it is a good starting place. This will help you decide whether you need to save enough money to send your child through a 4 year college or enough to put them through med school!
You should also think about whether the child will be able to receive any scholarships or government grants.
In most cases students qualify for some types of help with tuition. It is important that you visit the library with your child and look through current books of scholarships.
This will help you and your child better understand what is needed and expected to obtain scholarships.
Once your child reaches Junior High School many scholarships start to become available. So do check well before it is time to think about collages etc.
You can have your child go ahead and start filling out scholarship applications right away. This will give them a sense of responsibility about their future. It will allow them to help save money for college.
You also need to think about what type of school your teen will attend. State colleges are far cheaper then private colleges. If the student wants to attend school away from home that will add extra expenses. You will have to plan to save money for a dorm room or an apartment. The student will also need money for food and daily living expenses.
In these tough economic times more and more parents are making their children attend colleges that are close to home. This helps save money, because the student can live at home. If your child chooses not to live at home, it is important that you make them responsible for their rent and utilities. It is important for young adults to explore their independence, but it is also important for them to learn responsibility.
Savings Accounts - You can open a savings account to save for college; however you are not likely to get a big return on your money. Another option is to save a chunk of money and then put it into a CD and allow it to grow. The best option is to look into the many different college savings accounts that are available.
529 plans - 529 college saving plans are popular. These plans allow you or a relative to place money in a savings account for college. This money is tax free. When the student decides to go to college the money is available for use on tuition, books and office supplies.
529 plans very slightly from state to state. You would be wise to do some research and find out exactly how the 529 plan works for your state. If you are interested in obtaining a 529 college savings plan check this site www.savingforcollege.com/college_savings_201/ for a list of programs for each state. You can also obtain a 529 college saving plan through a financial advisor.
If the child decides that they do not want to go to college or if they come up with another means to pay for it, such as a scholarship, then you can withdraw the money. You will have to pay tax on the money at this point. There is also a 10% penalty to withdraw the money for anything other than school related items.
Upromise .com is a great little website which is a one-stop college service provider that helps families earn, save and pay for higher education. All you have to do to automatically save money for college while making everyday purchases at grocery and drug stores, gas stations, restaurants, retail stores and online shopping sites.
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